opinion | Digital Sovereignty: Start-ups and Large Groups, Get Together!

Posted on 6 Dec. 2022 at 2:56 pm

You won’t miss it, an uncertain macroeconomic context is affecting the tech world. If industry giants are not spared, the effect is even more felt on start-ups, more vulnerable to economic risks. Indeed, inflation or rising interest rates slow down growth and force investors to be cautious. Consequence: fundraising is rarer or less important.

It is in this economic environment that European start-ups seek to become world-class companies. But that goal appears to be an elusive step.

Alliance of innovation and experience

The Tech world is largely dominated by American and Chinese start-ups who – on the strength of their success in a continental-sized domestic market – seem to be establishing themselves internationally more easily. However, there is no lack of potential European champions, but many of them had to retreat in the face of difficulties encountered outside our borders. What did our nuggets lack to succeed in their international bet? Probably the alliance between its innovation and the experience of large groups.

The alliance between start-ups and large groups is not easy. Each of the parties has its fears and a priori. For start-ups, it is above all the fear of losing the boldness and agility that allow them to innovate quickly by going through long and tedious processes. The lack of a quick time to market is also a concern for most young companies (96%).

Large companies, in turn, must be more agile and quick in decision-making, including to convince shareholders. Another aspect is the omnipresence of the start-up founder, which is often a source of conflict. A recent report by BCG, by the way, recommends defining from the beginning of the collaboration the place it will occupy in order to gain competitiveness by accepting strategies or guidelines coming from the partners.

Tools and methods

To shine internationally, young shoots make innovation their main strength. They can tackle obstacles alone, risking being annihilated by powerful local competitors, or join forces with large groups to benefit from their experience in this exercise. For start-ups, one of the biggest challenges is to acquire a perfect knowledge of the market they are targeting. By joining forces with large companies experienced in the field, they can take advantage of proven tools and methods.

Multinationals can also provide the necessary rigor and structure for young companies in full development. Thanks to their predictive approach, they are able to understand the markets and limit risks, an important argument for convincing investors and securing new funding.

On the other hand, start-ups can also take advantage of the human resources of partner companies to adapt to new markets. In a recent study by Stripe, 53% of startup executives said that the time taken to adhere to European compliance processes is the biggest threat to their business. Florent Menegaux, chairman of Michelin, recently declared: “In our ultra-competitive environment, we need to work alongside younger and more agile companies”.

Trust at the heart of the relationship

For large companies, getting closer to start-ups means benefiting from an innovation capacity that is crucial today in view of the rapid emergence of new entrants in all industries. Juggernauts who crashed from missing the innovation curve are not uncommon. Among the most telling examples are Nokia and BlackBerry, which were slow to adopt touch screens and new operating systems. The rest, we know.

But there is no miracle recipe. For this merger to bear fruit, trust must be at the center of the relationship, in order to create value and unique synergies, placing innovation at the center of its strategies.

We bet that in the future, in an extremely competitive global economic environment and marked by fierce trade wars between the main economic blocs, young structures and the largest groups will work together to place Europe once again at the center of the global technological ecosystem.

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